Disclosure Of Financial Risk Management Explanatory | 4. Financial Risk Management 4.1 Summary 4.1.1 Overview of financial risk management policy The financial risks that the Group is exposed to are credit risk, market risk, liquidity risk, operational risk and others. This note regarding financial risk management provides information about the risks that the Group is exposed to and about its objectives, policies, risk assessment and management procedures, and capital management. Additional quantitative information is disclosed throughout the consolidated financial statements. The Group’s risk management system focuses on efficiently supporting long-term strategy and management decisions through increased risk transparency, spread of risk management culture and preemptive response to rapidly changing financial environments. Credit risk, market risk, liquidity risk, and operational risk are recognized as the Group’s significant risks and measured and managed by quantifying them in the form of Internal Capital or Value at Risk (“VaR”) using statistical methods. 4.1.2 Risk management organization 4.1.2.1 Risk Management Committee The Risk Management Committee, as the ultimate decision-making body, deals with risk-related issues, such as establishing risk management strategies in accordance with the strategic direction determined by the Board of Directors, determining the affordable level of risk appetite, reviewing the level of risk and the status of risk management activities, approving the application of risk management systems, methodologies, and major improvements, and establishing and approving risk management policies and procedures to timely recognize, measure, monitor, and control risks arising from various transactions by the Group. 4.1.2.2 Risk Management Council The Risk Management Council is responsible for consulting on matters delegated by the Risk Management Committee and requests for review by the Management Executive Committee, consulting on details of each subsidiary’s risk management policies and procedures, monitoring the Group’s risk management status, and establishing and implementing necessary measures. 4.1.2.3 Risk Management Department The Risk Management Department manages risk management policies, procedures, and business processes. 4.2 Credit Risk 4.2.1 Overview of credit risk Credit risk is the risk of loss from the portfolio of assets held due to the counterparty’s default, breach of contract and deterioration of credit quality. For risk management reporting purposes, the Group considers all factors of credit risk exposure, such as default risk of individual borrowers, country risk and risk of specific sectors. The Group defines default as the definition applied to the calculation of Capital Adequacy Ratio under the new Basel Accord (Basel III). 4.2.2 Credit risk management The Group measures the expected loss and economic capital for the assets subject to credit risk management, including on-balance off-balance In addition, to prevent excessive concentration of exposures by borrower and industry, the total exposure limit at the Group level is introduced, applied, and managed to control the credit concentration risk. All of the Kookmin Bank’s loan customers (individuals and corporates) are assigned with credit rating and managed by a comprehensive internal credit evaluation system. For individuals, the credit rating takes into account the personal information, income and job information, asset information, and bank transaction information. For corporates, the credit rating is evaluated by analyzing and utilizing financial and non-financial The credit rating, once assigned, serves as the fundamental instrument in Kookmin Bank’s credit risk management, and is applied in a wide range of credit risk management processes, including credit approval, credit limit management, loan pricing and computation of allowance for credit loss. For corporates, Kookmin Bank conducts a regular credit evaluation at least once a year, and the review and supervision departments regularly validate the adequacy of credit ratings to manage credit risks. KB Kookmin Card Co., Ltd.’s credit scoring system is divided into Application Scoring System (“ASS”) and Behavior Scoring System (“BSS”). For applications that meet the eligibility criteria for card issuance, the card will be issued only if the ASS credit rating is above the standard. KB Kookmin Card Co., Ltd.’s internal information, a credit bureau company’s external information and personal information on the application are used to calculate the ASS credit rating. The BSS, which is recalculated on a weekly basis, predicts the delinquency probability of cardholders, and utilizes it to monitor cardholders and portfolio risk. In order to establish a credit risk management system, the Group manages credit risk by forming a separate risk management organization. In particular, independent of the Sales Group, the Credit Analysis Group of Kookmin Bank, a subsidiary, is in charge of loan policy, loan system, credit rating, credit analysis, follow-up 4.2.3 Maximum exposure to credit risk The Group’s maximum exposures of financial instruments other than equity securities, to credit risk without consideration of collateral values as of December 31, 2019 and 2020, are as follows: December 31, 2019 December 31, 2020 (In millions of Korean won) Financial assets Due from financial institutions measured at amortized cost * ₩ 18,142,960 ₩ 22,720,091 Financial assets at fair value through profit or loss Due from financial institutions measured at fair value through profit or loss 216,367 100,094 Securities measured at fair value through profit or loss 50,721,526 58,415,100 Loans measured at fair value through profit or loss 427,545 337,983 Financial instruments indexed to the price of gold 79,805 89,965 Derivatives 3,190,673 5,545,385 Loans measured at amortized cost * 339,684,059 377,166,984 Financial investments Securities measured at fair value through other comprehensive income 43,556,848 58,456,889 Securities measured at amortized cost * 25,346,555 36,870,229 Loans measured at fair value through other comprehensive income 375,098 293,409 Other financial assets * 9,147,059 14,167,689 490,888,495 574,163,818 Off-balance Acceptances and guarantees contracts 8,327,494 8,548,928 Financial guarantee contracts 3,847,390 4,964,468 Commitments 151,797,615 159,133,983 163,972,499 172,647,379 ₩ 654,860,994 ₩ 746,811,197 * After netting of allowance. 4.2.4 Credit risk of loans The Group maintains an allowance for loan losses associated with credit risk of loans to manage its credit risk. The Group assesses expected credit losses and recognizes loss allowances of financial assets at amortized cost and financial assets at fair value through other comprehensive income. Financial assets at fair value through profit or loss are excluded. Expected credit losses are a probability-weighted estimate of possible credit losses occurred in a certain range by reflecting reasonable and supportable information that is reasonably available at the reporting date without undue cost or effort, including information about past events, current conditions and forecasts of future economic conditions. The Group measures the expected credit losses of loans classified as financial assets measured at amortized cost, by deducting allowances for credit losses. The expected credit losses of loans classified as financial assets at fair value through other comprehensive income are presented in other comprehensive income in the consolidated financial statements. 4.2.4.1 Credit risk exposure Credit qualities of loans as of December 31, 2019 and 2020, are as follows: December 31, 2019 12-month Lifetime expected credit losses Not applying Total Non-impaired Impaired (In millions of Korean won) Loans measured at amortized cost* Corporate Grade 1 ₩ 83,839,707 ₩ 2,621,898 ₩ 1,000 ₩ — ₩ 86,462,605 Grade 2 58,057,809 4,683,445 7,052 — 62,748,306 Grade 3 2,650,199 2,187,662 4,194 — 4,842,055 Grade 4 518,108 900,386 4,605 — 1,423,099 Grade 5 16,648 355,893 805,938 — 1,178,479 145,082,471 10,749,284 822,789 — 156,654,544 Retail Grade 1 146,265,744 3,611,001 8,155 — 149,884,900 Grade 2 7,081,846 4,433,832 29,304 — 11,544,982 Grade 3 2,080,690 1,541,647 11,366 — 3,633,703 Grade 4 185,081 387,811 9,722 — 582,614 Grade 5 10,180 587,448 545,295 — 1,142,923 155,623,541 10,561,739 603,842 — 166,789,122 Credit card Grade 1 8,390,177 96,052 — — 8,486,229 Grade 2 5,695,069 719,065 — — 6,414,134 Grade 3 1,558,999 1,161,396 — — 2,720,395 Grade 4 26,404 390,941 — — 417,345 Grade 5 350 135,630 474,327 — 610,307 15,670,999 2,503,084 474,327 — 18,648,410 316,377,011 23,814,107 1,900,958 — 342,092,076 Loans measured at fair value through other comprehensive income Corporate Grade 1 241,524 — — — 241,524 Grade 2 133,574 — — — 133,574 Grade 3 — — — — — Grade 4 — — — — — Grade 5 — — — — — 375,098 — — — 375,098 375,098 — — — 375,098 ₩ 316,752,109 ₩ 23,814,107 ₩ 1,900,958 ₩ — ₩ 342,467,174 December 31, 2020 12-month Lifetime expected credit losses Not applying Total Non-impaired Impaired (In millions of Korean won) Loans measured at amortized cost* Corporate Grade 1 ₩ 93,033,311 ₩ 4,646,801 ₩ 7,042 ₩ — ₩ 97,687,154 Grade 2 61,701,031 7,060,916 7,817 — 68,769,764 Grade 3 2,702,369 2,507,455 3,055 — 5,212,879 Grade 4 611,743 1,085,704 8,562 — 1,706,009 Grade 5 18,792 394,935 2,162,732 — 2,576,459 158,067,246 15,695,811 2,189,208 — 175,952,265 Retail Grade 1 163,261,012 3,536,290 6,789 — 166,804,091 Grade 2 8,828,445 4,197,409 34,896 — 13,060,750 Grade 3 2,519,004 1,322,878 9,012 — 3,850,894 Grade 4 225,262 402,881 8,352 — 636,495 Grade 5 39,466 636,361 672,397 — 1,348,224 174,873,189 10,095,819 731,446 — 185,700,454 Credit card Grade 1 8,210,540 412,555 — — 8,623,095 Grade 2 5,831,625 708,405 — — 6,540,030 Grade 3 1,526,382 1,216,434 — — 2,742,816 Grade 4 16,978 247,241 — — 264,219 Grade 5 2,101 118,907 506,462 — 627,470 15,587,626 2,703,542 506,462 — 18,797,630 348,528,061 28,495,172 3,427,116 — 380,450,349 Loans measured at fair value through other comprehensive income Corporate Grade 1 235,469 — — — 235,469 Grade 2 57,940 — — — 57,940 Grade 3 — — — — — Grade 4 — — — — — Grade 5 — — — — — 293,409 — — — 293,409 293,409 — — — 293,409 ₩ 348,821,470 ₩ 28,495,172 ₩ 3,427,116 ₩ — ₩ 380,743,758 * Before netting of allowance Credit qualities of loans graded according to internal credit ratings as of December 31, 2019 and 2020, are as follows: Range of Probability Retail Corporate Grade 1 0.0 ~ 1.0 1 ~ 5 grade AAA ~ BBB+ Grade 2 1.0 ~ 5.0 6 ~ 8 grade BBB ~ BB Grade 3 5.0 ~ 15.0 9 ~ 10 grade BB- Grade 4 15.0 ~ 30.0 11 grade B- Grade 5 30.0 ~ 12 grade or under CC or under 4.2.4.2 Quantification of the extent to which collateral and other credit enhancements mitigate credit risk of loans as of December 31, 2019 and 2020, are as follows: December 31, 2019 12-month Lifetime expected credit losses Total Non-impaired Impaired (In millions of Korean won) Guarantees ₩ 70,183,658 ₩ 3,839,736 ₩ 179,825 ₩ 74,203,219 Deposits and savings 4,478,032 118,221 8,034 4,604,287 Property and equipment 10,014,552 582,109 55,410 10,652,071 Real estate 155,769,901 10,839,595 417,815 167,027,311 ₩ 240,446,143 ₩ 15,379,661 ₩ 661,084 ₩ 256,486,888 December 31, 2020 12-month Lifetime expected credit losses Total Non-impaired Impaired (In millions of Korean won) Guarantees ₩ 79,088,720 ₩ 5,732,814 ₩ 187,512 ₩ 85,009,046 Deposits and savings 5,210,681 149,745 67,047 5,427,473 Property and equipment 11,607,675 808,476 120,471 12,536,622 Real estate 170,171,707 12,836,286 1,836,865 184,844,858 ₩ 266,078,783 ₩ 19,527,321 ₩ 2,211,895 ₩ 287,817,999 4.2.5 Credit risk of securities Credit qualities of securities other than equity securities that are exposed to credit risk as of December 31, 2019 and 2020, are as follows: December 31, 2019 12-month Lifetime expected credit Not applying Total Non-impaired Impaired (In millions of Korean won) Securities measured at amortized cost* Grade 1 ₩ 25,147,636 ₩ — ₩ — ₩ — ₩ 25,147,636 Grade 2 157,881 — — — 157,881 Grade 3 42,710 — — — 42,710 Grade 4 — — — — — Grade 5 — — — — — 25,348,227 — — — 25,348,227 Securities measured at fair value through other comprehensive income Grade 1 40,206,856 — — — 40,206,856 Grade 2 3,337,327 — — — 3,337,327 Grade 3 12,665 — — — 12,665 Grade 4 — — — — — Grade 5 — — — — — 43,556,848 — — — 43,556,848 ₩ 68,905,075 ₩ — ₩ — ₩ — ₩ 68,905,075 December 31, 2020 12-month Lifetime expected credit Not applying Total Non-impaired Impaired (In millions of Korean won) Securities measured at amortized cost* Grade 1 ₩ 36,467,719 ₩ — ₩ — ₩ — ₩ 36,467,719 Grade 2 359,551 — — — 359,551 Grade 3 38,847 7,061 — — 45,908 Grade 4 — — — — — Grade 5 — — — — — 36,866,117 7,061 — — 36,873,178 Securities measured at fair value through other comprehensive income Grade 1 54,576,777 — — — 54,576,777 Grade 2 3,746,200 — — — 3,746,200 Grade 3 126,391 — — — 126,391 Grade 4 7,521 — — — 7,521 Grade 5 — — — — — 58,456,889 — — — 58,456,889 ₩ 95,323,006 ₩ 7,061 ₩ — ₩ — ₩ 95,330,067 * Before netting of allowance Credit qualities of securities other than equity securities, according to the credit ratings by external rating agencies as of December 31, 2019 and 2020, are as follows: Domestic Foreign Credit quality KIS NICE P&I KAP FnPricing Inc. S&P Fitch-IBCA Moody’s Grade 1 AA0 to AAA AA0 to AAA AA0 to AAA AA0 to AAA A- A- A3 to Aaa Grade 2 A- A- A- A- BBB- to BBB+ BBB- to BBB+ Baa3 to Baa1 Grade 3 BBB0 to BBB+ BBB0 to BBB+ BBB0 to BBB+ BBB0 to BBB+ BB to BB+ BB to BB+ Ba2 to Ba1 Grade 4 BB0 to BBB- BB0 to BBB- BB0 to BBB- BB0 to BBB- B+ to BB- B+ to BB- B1 to Ba3 Grade 5 BB- BB- or under BB- or under BB- or under B or under B or under B2 or under Credit qualities of debt securities denominated in Korean won are based on the lowest credit rating by the domestic agencies above, and those denominated in foreign currencies are based on the lowest credit rating by the foreign agencies above. 4.2.6 Credit risk of due from financial institutions Credit qualities of due from financial institutions as of December 31, 2019 and 2020, are as follows: December 31, 2019 12-month expected Lifetime expected credit losses Not applying Total Non-impaired Impaired (In millions of Korean won) Due from financial institutions measured at amortized cost* Grade 1 ₩ 17,292,966 ₩ — ₩ — ₩ — ₩ 17,292,966 Grade 2 149,927 — — — 149,927 Grade 3 677,249 — — — 677,249 Grade 4 — — — — — Grade 5 13,991 13,179 360 — 27,530 ₩ 18,134,133 ₩ 13,179 ₩ 360 ₩ — ₩ 18,147,672 December 31, 2020 12-month expected Lifetime expected credit losses Not applying Total Non-impaired Impaired (In millions of Korean won) Due from financial institutions measured at amortized cost* Grade 1 ₩ 21,437,207 ₩ — ₩ — ₩ — ₩ 21,437,207 Grade 2 334,371 — — — 334,371 Grade 3 445,732 13,099 — — 458,831 Grade 4 479,142 — — — 479,142 Grade 5 13,520 — 283 — 13,803 ₩ 22,709,972 ₩ 13,099 ₩ 283 ₩ — ₩ 22,723,354 * Before netting of allowance The classification criteria of the credit qualities of due from financial institutions as of December 31, 2019 and 2020, is the same as the criteria for securities other than equity securities. 4.2.7 Credit risk mitigation of derivative financial instruments The quantification of the extent to which collateral mitigates credit risk of derivative financial instruments as of December 31, 2019 and 2020, are as follows: December 31, 2019 December 31, 2020 (In millions of Korean won) Deposits, savings, securities, etc. ₩ 802,170 ₩ 1,651,322 4.2.8 Credit risk concentration analysis 4.2.8.1 Details of loans by country as of December 31, 2019 and 2020, are as follows: December 31, 2019* Retail Corporate Credit card Total % Allowances Carrying (In millions of Korean won) Korea ₩ 166,310,457 ₩ 149,149,657 ₩ 18,642,111 ₩ 334,102,225 97.44 ₩ (2,363,332 ) ₩ 331,738,893 Europe — 1,118,429 — 1,118,429 0.33 (4,181 ) 1,114,248 China — 3,135,501 358 3,135,859 0.91 (20,654 ) 3,115,205 Japan 101 647,956 81 648,138 0.19 (576 ) 647,562 United States — 2,333,269 — 2,333,269 0.68 (9,205 ) 2,324,064 Others 478,564 1,072,375 5,860 1,556,799 0.45 (10,069 ) 1,546,730 ₩ 166,789,122 ₩ 157,457,187 ₩ 18,648,410 ₩ 342,894,719 100.00 ₩ (2,408,017 ) ₩ 340,486,702 December 31, 2020* Retail Corporate Credit card Total % Allowances Carrying (In millions of Korean won) Korea ₩ 182,344,832 ₩ 160,385,598 ₩ 18,734,570 ₩ 361,465,000 94.85 ₩ (2,433,702 ) ₩ 359,031,298 Europe — 2,042,979 — 2,042,979 0.54 (11,141 ) 2,031,838 China — 4,518,737 654 4,519,391 1.19 (20,489 ) 4,498,902 Japan 94 923,354 10 923,458 0.24 (1,249 ) 922,209 United States — 1,962,377 — 1,962,377 0.51 (21,489 ) 1,940,888 Cambodia 1,444,906 2,280,180 — 3,725,086 0.98 (89,652 ) 3,635,434 Indonesia 1,483,345 3,637,351 60,959 5,181,655 1.36 (699,947 ) 4,481,708 Others 427,276 833,080 1,437 1,261,793 0.33 (5,694 ) 1,256,099 ₩ 185,700,453 ₩ 176,583,656 ₩ 18,797,630 ₩ 381,081,739 100.00 ₩ (3,283,363 ) ₩ 377,798,376 * Amount includes loans measured at fair value through profit or loss, other comprehensive income and amortized cost. 4.2.8.2 Details of corporate loans by industry as of December 31, 2019 and 2020, are as follows: December 31, 2019 Loans % Allowances Carrying amount (In millions of Korean won) Financial institutions ₩ 16,405,404 10.42 ₩ (14,819 ) ₩ 16,390,585 Manufacturing 43,265,607 27.48 (394,428 ) 42,871,179 Service 65,277,701 41.46 (195,205 ) 65,082,496 Wholesale & Retail 18,593,540 11.81 (99,051 ) 18,494,489 Construction 3,679,798 2.34 (194,737 ) 3,485,061 Public sector 1,250,909 0.79 (2,084 ) 1,248,825 Others 8,984,228 5.70 (56,662 ) 8,927,566 ₩ 157,457,187 100.00 ₩ (956,986 ) ₩ 156,500,201 December 31, 2020 Loans % Allowances Carrying amount (In millions of Korean won) Financial institutions ₩ 16,044,243 9.09 ₩ (20,987 ) ₩ 16,023,256 Manufacturing 45,884,606 25.98 (473,360 ) 45,411,246 Service 76,001,877 43.04 (385,093 ) 75,616,784 Wholesale & Retail 23,129,457 13.10 (241,021 ) 22,888,436 Construction 4,397,814 2.49 (190,819 ) 4,206,995 Public sector 1,660,370 0.94 (74,839 ) 1,585,531 Others 9,465,289 5.36 (285,660 ) 9,179,629 ₩ 176,583,656 100.00 ₩ (1,671,779 ) ₩ 174,911,877 4.2.8.3 Details of retail loans and credit card receivables as of December 31, 2019 and 2020, are as follows: December 31, 2019 Loans % Allowances Carrying amount (In millions of Korean won) Housing ₩ 78,102,637 42.12 ₩ (34,395 ) ₩ 78,068,242 General 88,686,485 47.83 (676,927 ) 88,009,558 Credit card 18,648,410 10.05 (739,709 ) 17,908,701 ₩ 185,437,532 100.00 ₩ (1,451,031 ) ₩ 183,986,501 December 31, 2020 Loans % Allowances Carrying amount (In millions of Korean won) Housing ₩ 87,312,052 42.70 ₩ (61,155 ) ₩ 87,250,897 General 98,388,401 48.11 (848,933 ) 97,539,468 Credit card 18,797,630 9.19 (701,496 ) 18,096,134 ₩ 204,498,083 100.00 ₩ (1,611,584 ) ₩ 202,886,499 4.2.8.4 Details of credit risk of due from financial institutions, securities other than equity securities and derivative financial assets by industry as of December 31, 2019 and 2020, are as follows: December 31, 2019 Amount % Allowances Carrying amount (In millions of Korean won) Due from financial institutions measured at amortized cost Finance and insurance ₩ 18,147,672 100.00 ₩ (4,712 ) ₩ 18,142,960 18,147,672 100.00 (4,712 ) 18,142,960 Due from financial institutions measured at fair value through profit or loss Finance and insurance 216,367 100.00 — 216,367 216,367 100.00 — 216,367 Securities measured at fair value through profit or loss Government and government funded institutions 11,937,703 23.53 — 11,937,703 Finance and insurance 32,475,354 64.03 — 32,475,354 Others 6,308,469 12.44 — 6,308,469 50,721,526 100.00 — 50,721,526 Derivative financial assets Government and government funded institutions 7,330 0.23 — 7,330 Finance and insurance 3,003,371 94.13 — 3,003,371 Others 179,972 5.64 — 179,972 3,190,673 100.00 — 3,190,673 Securities measured at fair value through other comprehensive income Government and government funded institutions 16,744,232 38.44 — 16,744,232 Finance and insurance 21,439,272 49.22 — 21,439,272 Others 5,373,344 12.34 — 5,373,344 43,556,848 100.00 — 43,556,848 Securities measured at amortized cost Government and government funded institutions 11,115,435 43.86 (37 ) 11,115,398 Finance and insurance 12,279,883 48.44 (1,349 ) 12,278,534 Others 1,952,909 7.70 (286 ) 1,952,623 25,348,227 100.00 (1,672 ) 25,346,555 ₩ 141,181,313 ₩ (6,384 ) ₩ 141,174,929 December 31, 2020 Amount % Allowances Carrying amount (In millions of Korean won) Due from financial institutions measured at amortized cost Finance and insurance ₩ 22,723,354 100.00 ₩ (3,263 ) ₩ 22,720,091 22,723,354 100.00 (3,263 ) 22,720,091 Due from financial institutions measured at fair value through profit or loss Finance and insurance 100,094 100.00 — 100,094 100,094 100.00 — 100,094 Securities measured at fair value through profit or loss Government and government funded institutions 16,902,284 28.94 — 16,902,284 Finance and insurance 34,244,398 58.62 — 34,244,398 Others 7,268,418 12.44 — 7,268,418 58,415,100 100.00 — 58,415,100 Derivative financial assets Government and government funded institutions 44,670 0.81 — 44,670 Finance and insurance 4,925,535 88.82 — 4,925,535 Others 575,180 10.37 — 575,180 5,545,385 100.00 — 5,545,385 Securities measured at fair value through other comprehensive income Government and government funded institutions 26,205,864 44.83 — 26,205,864 Finance and insurance 24,847,602 42.51 — 24,847,602 Others 7,403,423 12.66 — 7,403,423 58,456,889 100.00 — 58,456,889 Securities measured at amortized cost Government and government funded institutions 24,018,884 65.14 (30 ) 24,018,854 Finance and insurance 11,019,911 29.89 (2,475 ) 11,017,436 Others 1,834,383 4.97 (445 ) 1,833,938 36,873,178 100.00 (2,950 ) 36,870,228 ₩ 182,114,000 ₩ (6,213 ) ₩ 182,107,787 4.2.8.5 Details of credit risk of due from financial institutions, securities other than equity securities and derivative financial assets by country as of December 31, 2019 and 2020, are as follows: December 31, 2019 Amount % Allowances Carrying amount (In millions of Korean won) Due from financial institutions measured at amortized cost Korea ₩ 13,864,687 76.40 ₩ (555 ) ₩ 13,864,132 United States 1,318,582 7.27 (1 ) 1,318,581 Others 2,964,403 16.33 (4,156 ) 2,960,247 18,147,672 100.00 (4,712 ) 18,142,960 Due from financial institutions measured at fair value through profit or loss Korea 216,367 100.00 — 216,367 216,367 100.00 — 216,367 Securities measured at fair value through profit or loss Korea 46,413,061 91.51 — 46,413,061 United States 1,939,330 3.82 — 1,939,330 Others 2,369,135 4.67 — 2,369,135 50,721,526 100.00 — 50,721,526 Derivative financial assets Korea 1,440,349 45.14 — 1,440,349 United States 529,956 16.61 — 529,956 France 358,951 11.25 — 358,951 Others 861,417 27.00 — 861,417 3,190,673 100.00 — 3,190,673 Securities measured at fair value through other comprehensive income Korea 40,948,853 94.01 — 40,948,853 United States 687,243 1.58 — 687,243 Others 1,920,752 4.41 — 1,920,752 43,556,848 100.00 — 43,556,848 Securities measured at amortized cost Korea 22,591,541 89.12 (1,034 ) 22,590,507 United States 1,312,941 5.18 (217 ) 1,312,724 Others 1,443,745 5.70 (421 ) 1,443,324 25,348,227 100.00 (1,672 ) 25,346,555 ₩ 141,181,313 ₩ (6,384 ) ₩ 141,174,929 December 31, 2020 Amount % Allowances Carrying amount (In millions of Korean won) Due from financial institutions measured at amortized cost Korea ₩ 16,535,849 72.78 ₩ (607) ₩ 16,535,242 United States 2,030,614 8.94 (283 ) 2,030,331 Others 4,156,891 18.28 (2,373 ) 4,154,518 22,723,354 100.00 (3,263 ) 22,720,091 Due from financial institutions measured at fair value through profit or loss Korea 100,094 100.00 — 100,094 100,094 100.00 — 100,094 Securities measured at fair value through profit or loss Korea 53,991,978 92.43 — 53,991,978 United States 2,370,538 4.06 — 2,370,538 Others 2,052,584 3.51 — 2,052,584 58,415,100 100.00 — 58,415,100 Derivative financial assets Korea 2,885,214 52.03 — 2,885,214 United States 706,866 12.75 — 706,866 Others 1,953,305 35.22 — 1,953,305 5,545,385 100.00 — 5,545,385 Securities measured at fair value through other comprehensive income Korea 54,786,461 93.72 — 54,786,461 United States 942,151 1.61 — 942,151 Others 2,728,277 4.67 — 2,728,277 58,456,889 100.00 — 58,456,889 Securities measured at amortized cost Korea 34,545,872 93.69 (2,283 ) 34,543,589 United States 1,049,387 2.85 (241 ) 1,049,146 Others 1,277,919 3.46 (426 ) 1,277,493 36,873,178 100.00 (2,950 ) 36,870,228 ₩ 182,114,000 ₩ (6,213 ) ₩ 182,107,787 Due from financial institutions and financial instruments at fair value through profit or loss that are linked to gold price and derivatives are mostly related to finance and insurance industry with high credit ratings. 4.3 Liquidity Risk 4.3.1 Overview of liquidity risk Liquidity risk is a risk that the Group becomes insolvent due to the mismatch between the inflow and outflow of funds, unexpected cash outflows, or a risk of loss due to financing funds at a high interest rate or disposing of securities at an unfavorable price due to lack of available funds. The Group manages its liquidity risk through analysis of the contractual maturity of interest-bearing assets and liabilities, assets and liabilities related to the other inflows and outflows of funds, and off-balance 4.3.2 Liquidity risk management and indicator The liquidity risk is managed by risk management policies and liquidity risk management guidelines set forth in these policies applied to all risk management policies and procedures that may arise throughout the overall business of the Group. The Group calculates and manages cumulative liquidity gaps and liquidity ratio for all transactions and off-balance 4.3.3 Analysis of remaining contractual maturity of financial assets and liabilities The cash flows disclosed in the maturity analysis are undiscounted contractual amounts including principal and future interest receivables and payments; as such, the table below do not match with the amounts in the consolidated statements of financial position which are based on discounted cash flows. The future interest receipts and payments for floating-rate assets and liabilities are calculated on the assumption that the current interest rate is the same until maturity. 4.3.3.1 Remaining contractual maturity of financial assets and liabilities other than derivatives held for cash flow hedge as of December 31, 2019 and 2020, are as follows: December 31, 2019 On Up to 1-3 3-12 1-5 Over 5 Total (In millions of Korean won) Financial assets Cash and due from financial institutions 1 ₩ 5,323,332 ₩ 1,038,805 ₩ 286,091 ₩ 822,123 ₩ 18,628 ₩ — ₩ 7,488,979 Financial assets at fair value through profit or loss 52,488,545 446,069 273,144 187,821 236,130 1,011,289 54,642,998 Derivatives held for trading 2 3,008,598 — — — — — 3,008,598 Derivatives held for hedging 3 — 4,892 20,216 37,441 41,401 66,176 170,126 Loans measured at amortized cost 2,908,095 33,042,040 32,668,128 125,125,270 94,802,566 96,757,198 385,303,297 Financial investments 4 Financial assets at fair value through other comprehensive income 2,101,605 526,465 1,403,884 6,761,533 33,604,010 4,506,581 48,904,078 Securities measured at amortized cost — 1,002,164 2,080,834 5,700,500 7,366,945 15,888,344 32,038,787 Other financial assets 71,528 6,578,005 179,790 1,373,850 40,243 35,927 8,279,343 ₩ 65,901,703 ₩ 42,638,440 ₩ 36,912,087 ₩ 140,008,538 ₩ 136,109,923 ₩ 118,265,515 ₩ 539,836,206 December 31, 2019 On Up to 1-3 3-12 1-5 Over 5 Total (In millions of Korean won) Financial liabilities Financial liabilities at fair value through profit or loss 2 ₩ 2,663,327 ₩ — ₩ — ₩ — ₩ — ₩ — ₩ 2,663,327 Financial liabilities designated at fair value through profit or loss 2 12,704,826 — — — — — 12,704,826 Derivatives held for trading 2 2,842,950 — — — — — 2,842,950 Derivatives held for hedging 3 — 14,764 15,588 1,652 20,044 129 52,177 Deposits 5 141,821,986 17,180,492 27,300,542 110,410,809 10,804,440 2,354,504 309,872,773 Borrowings 7,074,508 12,341,516 3,057,980 8,994,817 4,950,294 1,763,234 38,182,349 Debentures 22,285 2,652,730 3,812,476 11,062,873 32,477,672 3,515,716 53,543,752 Lease liabilities 256 19,304 35,730 137,419 318,781 66,032 577,522 Other financial liabilities 114,320 17,663,385 187,976 212,059 693,921 119,637 18,991,298 ₩ 167,244,458 ₩ 49,872,191 ₩ 34,410,292 ₩ 130,819,629 ₩ 49,265,152 ₩ 7,819,252 ₩ 439,430,974 Off-balance Commitments 6 ₩ 151,797,615 ₩ — ₩ — ₩ — ₩ — ₩ — ₩ 151,797,615 Financial guarantee contracts 7 3,847,390 — — — — — 3,847,390 ₩ 155,645,005 ₩ — ₩ — ₩ — ₩ — ₩ — ₩ 155,645,005 December 31, 2020 On Up to 1-3 3-12 1-5 Over 5 Total (In millions of Korean won) Financial assets Cash and due from financial institutions 1 ₩ 7,186,004 ₩ 1,449,949 ₩ 469,858 ₩ 1,217,217 ₩ 35,056 ₩ — ₩ 10,358,084 Financial assets at fair value through profit or loss 60,520,103 242,664 83,408 25,658 142,547 561,959 61,576,339 Derivatives held for trading 2 5,210,512 — — — — — 5,210,512 Derivatives held for hedging 3 — 9,371 32,816 74,364 70,863 88,462 275,876 Loans measured at amortized cost 3,126,366 29,240,531 35,862,097 135,526,320 116,211,931 103,685,410 423,652,655 Financial investments 4 Financial assets at fair value through other comprehensive income 2,532,279 896,523 1,556,600 10,523,465 35,347,644 16,949,942 67,806,453 Securities measured at amortized cost — 1,003,104 2,724,223 2,567,726 9,658,717 29,923,188 45,876,958 Other financial assets 89,855 11,514,303 206,227 1,273,876 73,735 48,019 13,206,015 ₩ 78,665,119 ₩ 44,356,445 ₩ 40,935,229 ₩ 151,208,626 ₩ 161,540,493 ₩ 151,256,980 ₩ 627,962,892 December 31, 2020 On Up to 1-3 3-12 1-5 Over 5 Total (In millions of Korean won) Financial liabilities Financial liabilities at fair value through profit or loss 2 ₩ 2,025,952 ₩ — ₩ — ₩ — ₩ — ₩ — ₩ 2,025,952 Financial liabilities designated at fair value through profit or loss 2 9,784,107 — — — — — 9,784,107 Derivatives held for trading 2 5,014,072 — — — — — 5,014,072 Derivatives held for hedging 3 — 3,123 4,120 62,147 35,198 109 104,697 Deposits 5 182,111,594 17,207,360 28,485,765 99,879,946 12,133,364 1,664,509 341,482,538 Borrowings 9,333,894 17,730,230 4,923,897 9,617,100 7,616,809 938,374 50,160,304 Debentures 18,105 2,806,105 6,769,859 14,330,686 35,512,544 6,241,226 65,678,525 Lease liabilities 205 22,372 40,376 152,084 332,033 44,882 591,952 Other financial liabilities 217,866 24,153,880 208,745 329,291 748,593 215,447 25,873,822 ₩ 208,505,795 ₩ 61,923,070 ₩ 40,432,762 ₩ 124,371,254 ₩ 56,378,541 ₩ 9,104,547 ₩ 500,715,969 Off-balance Commitments 6 ₩ 159,133,983 ₩ — ₩ — ₩ — ₩ — ₩ — ₩ 159,133,983 Acceptances and guarantees contracts 8,548,928 — — — — — 8,548,928 Financial guarantee contracts 7 4,964,468 — — — — — 4,964,468 ₩ 172,647,379 ₩ — ₩ — ₩ — ₩ — ₩ — ₩ 172,647,379 1 Restricted due from financial instruments amounting to ₩ 13,394,627 million and ₩ 15,331,515 million are excluded as of December 31, 2019 and 2020, respectively. 2 Financial liabilities measured or designated at fair value through profit or loss and derivatives held for trading are not managed by contractual maturity because they are expected to be traded or redeemed before maturity. Therefore, the carrying amounts of those financial instruments are included in the ‘On demand’ category. 3 Cash flows of derivative instruments held for hedging are shown at net amounts of cash inflows and outflows by remaining contractual maturity. 4 Equity securities designated as financial assets at fair value through other comprehensive income are included in the ‘On demand’ category because most are available for sale at any time. However, equity securities restricted from sale, are included in the category corresponding to the date on which the restriction is lifted. 5 Deposits that are contractually repayable on demand or on short notice are included in the ‘On demand’ category. 6 Commitments are included in the ‘On demand’ category because payments can be requested at any time. 7 Cash flows under financial guarantee contracts are classified based on the earliest period that the contract can be executed. 4.3.3.2 Contractual cash flows of derivatives held for cash flow hedge as of December 31, 2019 and 2020, are as follows: December 31, 2019 Up to 1-3 3-12 1-5 Over 5 years Total (In millions of Korean won) Cash flow to be received (paid) of net-settled ₩ (639 ) ₩ (1,831 ) ₩ (5,021 ) ₩ (10,602 ) ₩ 1,084 ₩ (17,009 ) Cash flow to be received of gross-settled derivatives 14,119 200,170 657,909 1,888,772 — 2,760,970 Cash flow to be paid of gross-settled derivatives (18,171 ) (199,141 ) (671,375 ) (1,955,650 ) — (2,844,337 ) December 31, 2020 Up to 1 1-3 3-12 1-5 Over 5 years Total (In millions of Korean won) Cash flow t |